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FMC Chair Puts the Screws to Ocean Carriers

Federal Maritime Commission (FMC) chair Daniel Maffei had strong words for ocean carriers not doing their part to clear empty containers, as the Port of New York and New Jersey prepare to implement a fee on long-dwelling containers set to begin next month.

“When ocean carriers continue to bring thousands of containers per month to a port and only pick up a fraction of that number, it creates an untenable situation for terminals, importers and exporters, trucking companies and the port itself,” Maffei said in a statement Thursday. “The Commission has already been investigating reports of carriers charging per diem container charges even when the shipper or trucker cannot possibly return the container due to terminal congestion. I will ask that this investigation be broadened and intensified to cover instances where shippers and truckers are being forced to store containers or move them without proper compensation.”

Maffei’s statement came after the chair and managing director Lucille Marvin visited this week with members of the port, trucking industry and terminal operators in Newark.

That came after the National Industrial Transportation League and Bi-State Motor Carriers Association wrote to the FMC last week asking that it suspend demurrage and detention fees at the Port of New York and New Jersey.

The fees charged by carriers have been an ongoing area of concern voiced by shippers across industry groups and port facilities. The charges are levied once a container is used either on port or outside of a port past an allotted amount of free time. However, shippers and truckers have complained about the difficulty in scheduling appointments to make a return, with existing container congestion at the terminal also leaving little room for empties.

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That was the case for a Rancho Dominguez, Calif.-based logistics firm called Golden State Logistics, which won a case earlier this year involving Hapag-Lloyd. The ocean carrier was fined $822,220 after it was found to have made 14 Shipping Act violations.

Golden State contended it was unable to bring the empty containers back in time even after attempting to schedule a return appointment. An FMC administrative law judge called the detention fees “unreasonable” and “punitive” given the inability to make the return was the carrier’s own doing.

Maffei’s statement looks to apply further pressure on carriers for their part in the container congestion problem that has weighed heavily on the movement of cargo since the start of the pandemic.

“The Commission will ask the carriers that have fallen the most behind in picking up their empties what their plan is to rectify the situation,” Maffei said. “Whatever their answers may be, I will do everything in my power to ensure that carriers do not receive involuntarily subsidized storage for empty containers that belong to them.”

Maffei went on to say that if a shipper or truck driver can prove that they were not able to make the return, they should not be subject to a fee and should also be paid by the ocean carrier for having to store the container.

“This is completely in line with the incentive principle set forth by the Commission in its rules in that it would promote the movement of cargo since chassis and space would be freed up by carriers taking full responsibility for the empty containers resulting from the increased volumes of import cargo they bring in,” Maffei said.

The Port Authority of New York and New Jersey said Thursday it will begin a fee program Sept. 1 that requires carriers’ container volume leaving the port to either meet or exceed 110 percent of the containers coming into the facility. A $100 fee per container would be charged if carriers miss that target.

“The Port of New York and New Jersey is facing record import volumes, leading to empty containers accumulating in and around the port complex that are now affecting the regional supply chain that is already under stress from various sources across the country,” said Bethann Rooney, director of the Port Department at the Port Authority of New York and New Jersey.

Rooney went on to ask carriers to “step up their efforts to evacuate empty containers quicker and at higher volumes to free up much needed capacity” at the port district.

The fee comes as East and Gulf coast ports have been flooded with cargo as shippers have moved to divert cargo away from the congested West Coast ports in a bid to ensure more timely delivery of their products.

The Port of New York and New Jersey moved 859,953 twenty-foot equivalent units (TEUs) in June. That was up nearly 41 percent from June 2019 and up 1.7 percent from the previous month, making June the second-busiest month on record for the port.